Dow Jones: Blue-Chip Dow Gains as Investors Flee Tech Stocks

Dow Hits Record as Chips Crack

The Dow Jones Industrial Average surged roughly 800 points on Thursday, up 1.6%, and posted a new record high at 51,502.19. The S&P 500 Index (SPX) held near the flatline. The Nasdaq Composite dropped 0.5%.

Broadcom plunged 15% after missing revenue expectations and the selling hit every chip name on the board. Money came out of semiconductors and went straight into healthcare, financials, and consumer names. Nine of eleven S&P 500 sectors finished positive. The market is not selling off. It is changing leadership.

Daily Dow Jones Industrial Average Technical Analysis

The Dow Jones Industrial Average is trading higher shortly before the mid-session on Thursday. The market hit a new record high at 51502.19, making yesterday’s low at 50687.17 a new minor bottom. A trade through this level will shift momentum back to the downside. A second minor bottom comes in at 50314.54, indicating solid support and a strong trend despite lofty price levels.

The main trend is up according to the daily swing chart. The main trend will change to down on a trade through 49235.74, indicating the rally has room to breathe.

Daily S&P 500 Index Technical Analysis

The S&P 500 Index is edging higher after recovering from early session weakness. The main trend is up, but momentum has shifted lower.

A trade through 7620.90 will signal a resumption of the uptrend. The main trend changes to down on a move through 7333.68. So it’s safe at this moment.

The main range is 7333.68 to 7620.90. Its retracement zone at 7477.29 to 7443.40 is the first major downside target. Since the main trend is up, buyers are likely to come in on a pullback to this area. However, 7443.40 is also the trigger point for an acceleration to the downside.

Daily Nasdaq Composite Index Technical Analysis

The Nasdaq Composite Index is sharply lower. The sell-off has helped form a new main top at 27190.21. A trade through this top will signal a resumption of the uptrend.

The main range is 25701.44 to 27190.21. Its retracement zone at 26445.83 to 26270.15 is the primary downside target. Since the main trend is up, buyers could come in on the first test of this area. If 26270.15 fails, however, then look for an acceleration to the downside with 25701.44 the next major target.

Most importantly, the index is trading lower for the week, putting it in a position to form a weekly closing price reversal top. If confirmed, we could see a steep correction over the next 2 to 3 weeks.

Broadcom Miss Reprices Chip Sector

Broadcom missed fiscal second-quarter revenue by $80 million and the stock cratered 15% on Thursday. The Philadelphia Semiconductor Index fell more than 4%. The VanEck Semiconductor ETF dropped over 2%.

Micron Technology took the hardest hit among the majors, down nearly 8%. Arm Holdings lost 6%. Marvell Technology and Advanced Micro Devices each fell about 5% and Qualcomm sold off with them.

One revenue miss from one company and the entire AI hardware trade repriced in a single session. That tells you how much of the rally was built on the assumption that every quarter would beat.

Healthcare and Financials Lead Rotation

UnitedHealth jumped nearly 6% after Bank of America upgraded the stock to Buy. Eli Lilly climbed 4.5% and the healthcare sector gained more than 2% on the day. That was the biggest move in the rotation.

Financials came back after selling off earlier in the week. JPMorgan Chase advanced 2.7% and the financial sector picked up nearly 2%. Walmart added 1.4%. Costco rose about 2%. The Dow gaining 800 points while the Nasdaq drops half a percent tells you exactly where the money went. Out of chips and into everything else.

Jobless Claims Rise Ahead of Friday Payrolls

Weekly jobless claims came in higher than expected on Thursday. The labor market showed some cooling after ADP’s strong May reading earlier in the week. Manufacturing and services data still point to expansion but the jobs picture is sending mixed signals. Friday’s Nonfarm Payrolls is the tiebreaker. That report moves the 10-Year U.S. Treasury yield, the U.S. Dollar Index, and Fed expectations all at once.

The Middle East ceasefire between Israel and Lebanon is holding but the Strait of Hormuz is still restricted and U.S.-Iran military activity continues. The Dow rallied straight through those headlines on Thursday. Whether it keeps doing that depends on what comes out of the region between now and Friday’s close.

What to Watch

Thursday’s rotation was the cleanest signal in weeks. The Dow up 800 points to a record. The Nasdaq down half a percent. Nine of eleven S&P 500 sectors positive. Money left semiconductors after Broadcom’s 15% decline and went directly into healthcare, financials, and consumer stocks. The question going into Friday is whether this is one day of profit-taking in chips or the start of a leadership change that sticks.

Friday’s Nonfarm Payrolls decides the next move. A strong number supports the rotation into cyclicals and value. A weak number brings the rate-cut trade back and that favors growth and tech. The Israel-Lebanon ceasefire is holding but fragile and the Strait of Hormuz is still shut.

The Dow posted a new record at 51,502.19 with solid support at the minor bottoms at 50,687.17 and 50,314.54. The main trend does not change to down until 49,235.74.

On the S&P 500, a trade through 7,620.90 resumes the uptrend and the first major support zone is 7,477.29 to 7,443.40. A break below 7,443.40 triggers an acceleration to the downside.

The Nasdaq is the one to watch going into the close. It is trading lower for the week and sitting in position to form a weekly closing price reversal top. The primary downside target is 26,445.83 to 26,270.15. If 26,270.15 fails the next target is the main bottom at 25,701.44.

More Information in our Economic Calendar.